In Dubai, you have your choice. If you are a woman, and you want to buy your unmentionables from a man (usual, a man from India) you can do so, but you don't have to. Evidently, there are enough women in Dubai with these preferences to keep these kinds of stores in business.

In Saudi Arabia, you don't have a choice. The only women's lingerie stores allowed are those staffed solely by men. I imagine there are a lot women in the Kingdom whose trip to the lingerie shop leaves them uncomfortable, in more ways than one.

work shall be an inherent right of UAE nationals. If national employees are not available, preference in employment shall be given to Arab workers and then to workers of other nationalities.

In fact, in practice the UAE has shown preference for non-Arab laborers. Arab laborers can claim a sense of obligation and are seen as a potentially politically threatening group in large numbers. (Recall that 3 in 4 residents are non-nationals.) The use of Arab laborers was reduced at the time of Saddam's invasion of Kuwait; they showed symphathies with the invasion.

The GN continues, pointing out an inconsistency:

"UAE constitution provides for equality before the law without regard to race, nationality, or social status. It prohibits discrimination in every aspect of the employment relationship, including hiring, firing, promotions, job training or any other employment term," Dr Al Rokn, also a human rights activist, said.Mohammad Ebrahim Al Shaiba, a Dubai-based legal consultant, said the clause in the Labour Law that treats workers more advantageously on the basis of their nationality is unconstitutional and breaks international labour rules....Employers commit racial discrimination when they offer jobs on the basis of race, nationality or any personal attributes, a senior labour official said...."Companies must not seek workers of certain nationalities and jobs must be offered on the basis of qualifications and experience," the source said.

He was commenting on advertisements published in local newspapers seeking workers of certain nationalities. "Mentioning the nationality of a worker required to fill in a vacancy breaks the Labour Law, because it implies racial discrimination."

Gulf News is among those papers that regularly take job adverts like this:

"We are now seeing advertisements boldly seeking recruitment of workers of certain nationalities. Previously, the illegal practice was disguised by seeking US-educated or UK-educated employees," Majid Abdullah, an engineer said.

S. Kumar, an Indian accountant, said he cannot understand why employees are discriminated against because of their passports. "What does a passport have to do with skills and qualifications required for a certain job?" he asked.

All emphasis above is added. Thanks to KC of Teachco for the link.

ANALYSIS. Economists find it difficult to tell a story of discrimination between equally-qualified job seekers without encountering the contradiction that discrimination on the part of the employer lowers the employer's profit. We are left coming back to the idea that the job seekers are only seemingly equally qualified. (Other possibilities include that the manager is not acting in the best interest of the owner, or that it is the customers of the firm that are willing to pay to exercise their prejudices.)

Many firms, or departments of firms in the UAE are sorted by nationality or ethnicity. I suspect this has to do with the degree of trust (or ability to punish misbehavior) when a working group is all of one group. At my workplace physical plant is dominated by one ethnicity, the janitors by another, the gardeners by another, housing and transit by another, IT by another.

The one group that is diverse is the faculty (although we do use the requirement of a US-degree as a screen). Thus, in my department alone we have (by birth) two native born Americans, two Bolivians, two Egyptians, one Jordanian, one Korean, one Sri Lankan, one Armenian, one Iranian, and one Kiwi. Our commonality is the religion of Economics. Come the fall we'll have two more Iranians and a Turk. All have US PhDs, except the Kiwi. I'll still be the only Anglo.

By 1964 the growth of the economies of Abu Dhabi and Dubai was creating something of a gold rush mentality, particularly in Asia. A huge new demand for labour was resulting in mass immigration which the Trucial States were finding hard to control, or monitor, with their basic Immigration Services. As early as 1962 it had been reported in Council that upwards of nine hundred Asians a week were landing by boat at Khor Fakkan on the East Coast and then making their way to Dubai, Sharjah or Abu Dhabi. Most found their way to Dubai, where there were more opportunities.

Although it was understood that a system of seven individual entities was unworkable, this was just what was being attempted. Sheikh Sultan bin Saqr of Sharjah suggested a joint visa section, based in Dubai, a plan that Sheikh Rashid took under consideration for the next Council meeting. He stated, however, that he was perfectly happy with the controls in place in Dubai. Indeed, administration and government apparatus in Dubai were, at this point, far ahead of the six others in their organisation and effectiveness.

Though the immigration services is now largely federal, each of the seven emirates still retains some control of immigration. Thus, an employee's visa specify the company sponsoring the visa and the emirate of the workplace. If the company wishes to transfer the employee to an office in another emirate in needs the permission of the receiving emirate.

Monday, May 30, 2005

He's done a nice job of describing recreational dune bashing. Includes some nice pictures. One bit, on the road back, after the dune bashing:

For one stretch of the trip, the driver kept swerving perilously close to one of the Range Rovers while thumbing his mobile phone at the same time. Eventually he rolled down the window and drove within inches the other vehicle, sticking his phone out the window. I suddenly realized what he was doing.

"Bluetooth?" I asked.

"Yes, good pictures," he replied, apparently of the mind that a driver had the right to swap camera phone photos wirelessly with other drivers while speeding down the highway.

This is typical of the experience. The thrills don't stop once you've left the dunes. There's no OSHA nanny here.

"If at the end of the ratification process, we do not manage to solve the problems, the countries that would have said No, would have to ask themselves the question again," "President" Juncker told the Belgian newspaper Le Soir.

Got that? You have the right to vote, but only if you give the answer your rulers want you to give. But don't worry, if you don't, we'll treat you like a particularly backward nursery school and keep asking the question until you get the answer right. Even America's bossiest nanny-state Democrats don't usually express their contempt for the will of the people quite so crudely.

Juncker is a man from Luxembourg, a country two-thirds the size of your rec room, and, under the agreeably clubby EU arrangements, he gets to serve as "president" without anything so tiresome as having to be voted into the job by "ordinary people." His remarks capture precisely the difference between the new Europe and the American republic.

As The Eclectic Econoclast has noted, Quebec francophones have same if-at-first-you-don't-succeed attitude.

Most patrols finish their rations of fuel between the 23rd and 26th of the month," the source said. Each police patrol vehicle usually carries two policemen but at the end of the month the number in each vehicle increases to four policemen," the police source told Gulf News. The source said usually there were 15 police patrols out on the roads but when fuel was short the number was reduced to seven or may be only five vehicles per shift. "The ration given to each patrol is Dh400 per month," he said.

The Economist En Su Laberinto draws our attention to these words from the concluding paragraph of a recent op-ed in The Economist:

The way to support enterprise—American enterprise, the best in the world—is to be as unEuropean as possible. Mr President, look at France. Notice their economic policies. See how they subsidise this and protect that. Do we have to spell it out?

Bush, instead, has been going the Euroway:

A fine way to deal with this would be to cut corporate taxes (against which debt service can be deducted, hence the pro-debt bias); and an excellent way to pay for that would be to launch an assault on corporate welfare—the $100 billion a year or so, conservatively estimated, of special-interest subsidies and handouts that the government pays to American businesses. Preferably, don't just cut that lot, eliminate it.

This last recommendation is one that George Bush will be especially reluctant to accept. Mr Bush is the classic instance of a conservative politician who confuses support for particular businesses with support for enterprise in general. These seemingly similar ideas are in fact directly contradictory.

Some French factions, their normal obstreperousness leavened by paranoia, think the constitution is a conspiracy to use "ultraliberalism" -- free markets -- to destroy their "social model." That is the suffocating web of labor laws and other statism that gives France double-digit unemployment -- a staggering 22 percent of those under age 25.

Implicitly, they pay George Bush more of complement than he deserves for adherence to his free market principles.

On being overtaken, history teaches another lesson. America's economic strengths lie in qualities that are hard to distill into simple statistics or trends. We've maintained beliefs and practices that compensate for our weaknesses, including ambitiousness; openness to change (even unpleasant change); competition; hard work; and a willingness to take and reward risks. If we lose this magic combination, it won't be China's fault.

Entitled 'General Census of Population, Housing and Establishments' it will be "unique in terms of participation by nationals, both men and women, who will undergo extensive training to carry out various tasks in the project." The last census was in 1995.

Timetable:

The preparations stage started at the beginning of the year and would conclude by the end of May. The second (field) stage begins on July 15 and will continue till the end of the year. Preliminary results are expected in the first quarter of 2006, but processing and analysing data will take about a year.

Los Angeles housing isn't a bubble in the sense that Washington, DC housing is reported to be: in L.A., unlike DC, you can't get appreciably cheaper housing of equivalent quality by renting. Still, the current sales prices in relation to incomes make sense only if people buying now are reckoning on price appreciation, as I did eight years ago....If the financial futures markets were better developed, I could hedge against the risk of a price drop (or long plateau) without physically moving. But the HedgeStreet market is still quite thin, and the financial products promised by the partnership between Robert Shiller's MACRO Securities Research and the Chicago Mercantile Exchange appear to remain, for now, nothing but promises. So I'm heading for the sidelines, putting my money where Brad DeLong's mouth is.

I wonder how 100 year lease-holds in Dubai compare to conventional rental prices in that market.

Sunday, May 29, 2005

Key money has once again raised its ugly head though few would care to admit it. With government-owned residential apartments almost out of their reach since strict laws were put into place regarding the transfer of tenancy, the players have moved on to newer and more fertile grounds. They now, it is said, operate in places where landlords have not raised their rents and in old buildings where the rents are relatively low. How does one nip this operation in the bud? You cannot, simply because it’s hard to find anybody coming forward with a complaint that he had to fork out key money to the former tenant. To do so would be illegal to start with, and worse, because of the market situation, the confessor, more than anybody else stands to lose more than the player.

As usual, I'm sitting in my ivory tower and using my imagination to fill in the blanks. Or trying to. Here goes:

It seems that there is a profitable business signing leases on apartments for the sole purpose of subletting them. The unanswered question is why these opportunities exist. Either the players are better at finding tenants than the landlord, or the landlord is setting the price below the market rate, perhaps by ignorance.

In the case of government-owned housing, the price is presumably below the market rate on purpose. Only nationals could rent those apartments, but until recently they transfer tenancy to non-nationals. This created a profitable arbitrage opportunity for enterprising non-nationals, and many government-owned apartment blocks became occupied by non-nationals. This loophole has now been addressed (closed?) by the government.

There have been news accounts of landlords electing not to raise rents out of social consciousness towards their poorer tenants. Their intent is like the government's intent: to provide housing at below market rates. The difficulty is the same: the intended subsidy from landlord to tenant is easily captured by arbitragers and the generous landlord's intent is defeated.

To keep the landlord in the dark, perhaps the sublet agreement has the occupying tenant pay the monthly rent to the landlord. The arbitrager likes taking his or her money up front as key money. Should the occupying tenant fall behind on the rent the arbitrager keeps the key money, evicts the tenant and sublets again.

A new law streamlining relations between landlords and tenants will be issued soon, said Saeed Mohammad Al Gandi, Chairman of the Rents Committee at Dubai Municipality, yesterday. "The new property law will leave rents to be determined by the market forces," Al Gandi told Gulf News yesterday....Early this month, the Rents Committee warned landlords that they have no right to turn off utilities of tenants involved in disputes. Al Gandi said it has come to the notice of the committee that some landlords have done this to force their tenants to move out.

Why would landlords want to force tenants to move out? There are at least two possibilities:

1. The tenants have not abided by the contract, or the contract has expired. And the landlord has decided the best remedy is to reclaim the apartment so it can be rented to new tenants.

2. The landlord wants to break the contract (perhaps because market rents have risen above the contracted rate).

The role of a government arbiter is to determine which of these two applies. That is not an easy task and disagreements will persist whatever the determination of the facts is.

Setting aside the difficult arbitration problem, if it is the tenant who has violated the contract, or has no contract, then the job of a government arbiter is to enforce the contract in a timely fashion. One of the tools is eviction. When landlords resort to turning off the utilities, it could be because the government has failed to enforce the contract.

As market rents rise significantly, the landlord's incentive to break the contract rises. (This incentive will be magnified if there are government rules on the minimum number of months over which monthly rent will apply.)

Warning landlords they have no right to turn off the utilities is no deterrent. Penalties are required to create the offset to an break the contract in a period of rising market rents.

Saturday, May 28, 2005

Demand for housing is growing at all income levels. The relative profitability of low income housing may have fallen. One thing is clear, prices are up. One way for renters to deal with higher prices is to move down market. Here are some strategies:

In short, the tenant comes up against a wall, with the hike in rents also ripping rents in the family fabric with many a family head responding with the desperate: sending the wife and kids home, and then opting to live several to a room.

“Dubai is no longer the El Dorado that it once was, though the glitter has only increased over the years. Rents have been going through the roof in Dubai, Sharjah and Abu Dhabi. Taking bed and baggage to Ajman, Ras Al Khaimah, Fujairah and even Umm Al Quwain has only raised rents in those emirates too,” says Azad, a Pakistani employed in a showroom.

Azad shares bedspace in a room in a flat in Al Attar Shopping Mall, Karama. “Eight people to a room that is just 12x10 feet, one atop the other on bunker beds. It is the pits,” says Azad. “We are like cattle in a pen. The landlord is only interested in the rent. Imagine eight people to one toilet. You should see the chaos in the mornings.”

Azad’s ‘landlord’ is also an expatriate who rented the flat from a real estate agency to sublet it to as many as possible.

"Key money" is mentioned in the article; an upfront fee to let or sublet an apartment at a given month rent. While significant upfront fees could be a feature of ordinary rental agreements, they most often occur when there is government intervention like price ceilings holding down rents (or other rules such as prohibiting subletters from charging more rent than is in their contract with the landlord). Other possibilities include property managers taking advantage of absentee property owners.

There is a reference in the article to the Dubai Rent Committee. This suggests the possibility that rents are slow to rise to equilibrium levels due to government intervention.

RAS AL KHAIMAH — Water desalination business here is going through a rough patch due to the tough competition between companies which has led to compromise on quality and standardisation besides triggering a price war.

RAK has around 81 water desalination and purification facilities, 11 of which produce water for industrial purposes. Some of these factories have bottling capabilities while the rest supply water through tankers. “Most of the small sized plants will have to quit the market because of the tough competition,” says Faisal bin Faris, Head of the Trade License Issuance Centre (MART) of RAK Economic Department (RED).

Do I think the invisible hand will take care of consumers in this case? I have friends here who have had water tested. They report that there is substantial difference in quality. As reported in the story, grocers also are selective in the suppliers they use. Most consumers don't test water themselves, but they give their business to grocers and restaurants that they rely on to sell safe products. Are enough buyers doing this to force firms to price their water according to its quality, and to drive unsafe producers out of the market?

The tap water in Sharjah and Dubai is potable, but most of us don't use it for drinking.

o UAE has the world's highest per capita consumption of water of more than 500 litres per person per dayo water is priced below cost in the UAE, especially Abu Dhabi emirate.o unmetered use of water for agriculture and forestryo seawater intrusion into freshwater aquifers due to overdrawing the aquifero aquifers are drying up, some may soon be emptyo huge investment in desalination will be required to match consumptiono UAE population growth said to be the highest in the world (7 percent)o switching from home production to importing crops that use a lot of watero increasing salinity is affecting the range of crops that can be growno 17 different government authorities in the UAE look at water issueso government buildings and malls that are not billed for watero release of treated sewage water - it is currently released into the Gulf during the winter months rather into the ground

o Saudi stability:: Washington Institute: "The lack of clarity regarding Saudi succession has added to the kingdom's sense of uncertainty and nearly rudderless leadership. These anxieties would only be compounded if both Abdullah and Sultan -- who are themselves eighty-one and eighty years old, respectively -- died before Fahd passes. Observers have already noted increasing signs of engagement in palace politics by the next generation of princes, some of them in their fifties or sixties and with considerable administrative experience."

o Review of Succession in Saudi Arabia :: Daniel Pipes: "Another complexity arises from generational overlap - the youngest of the sons (born in 1947) is younger than the oldest of the great-grand-sons (born 1946), leading to a situation where "the pool of potentially active princes contains elements of four generations that are of roughly similar ages." "

o The Saudi Paradox :: Foreign Affairs: "The Saudi state is a fragmented entity, divided between the fiefdoms of the royal family. Among the four or five most powerful princes, two stand out: Crown Prince Abdullah and his half-brother Prince Nayef, the interior minister. Relations between these two leaders are visibly tense. In the United States, Abdullah cuts a higher profile. But at home in Saudi Arabia, Nayef, who controls the secret police, casts a longer and darker shadow. Ever since King Fahd's stroke in 1995, the question of succession has been hanging over the entire system, but neither prince has enough clout to capture the throne. Saudi Arabia is in the throes of a crisis. The economy cannot keep pace with population growth, the welfare state is rapidly deteriorating, and regional and sectarian resentments are rising to the fore. These problems have been exacerbated by an upsurge in radical Islamic activism. Many agree that the Saudi political system must somehow evolve, but a profound cultural schizophrenia prevents the elite from agreeing on the specifics of reform."

Friday, May 27, 2005

Abstract: It is widely thought that oil and democracy do not mix. Rentier states need not tax their citizens, thus breaking a crucial link between citizens and their governments and dimming the prospects for democracy. The link between rentierism and democracy is examined using a cross-regional dataset. Particular attention is paid to the possibility that there are both positive and negative effects of rentierism on democracy. Consistent support is not found for the notion that there is a net negative effect of rentierism on the prospects that a country will be democratic. Instead, democracy scores in the surrounding region are strongly correlated with a country's own democracy score.

Abstract: ....The author uses pooled time-series cross-national data from 113 states between 1971 and 1997 to show that oil exports are strongly associated with authoritarian rule; that this effect is not limited to the Middle East; and that other types of mineral exports have a similar antidemocratic effect, while other types of commodity exports do not.

The author also tests three explanations for this pattern: a "rentier effect," which suggests that resource-rich governments use low tax rates and patronage to dampen democratic pressures; a "repression effect," which holds that resource wealth enables governments to strengthen their internal security forces and hence repress popular movements; and a "modernization effect," which implies that growth that is based on the export of oil and minerals will fail to bring about the social and cultural changes that tend to produce democratic government....

Some revealing comments from an Arab News interview with Zaher Al Munajjed:

---QUOTE---I explained that the new investment laws permit any industrial conglomerate, or large company, to now come in and establish their own business without any need for a joint venture. Even in the distribution area, where there is still the need for a sponsor, we have seen over the last few years many so-called agencies changing hands sometimes amicably, sometimes not. Today, this is simply a business matter: There are discussions and then agreements, then the deal is done. Nobody is stuck for life with anyone else....I know of one family, which is very sophisticated, where to avoid confrontation among family members who have very different opinions about how to run the business, there hasn’t been a formal board meeting in 20 years. This is obviously not a way to prepare to face the competition.......only those companies that are mature enough to go public should do so. The mere fact of wanting to go public, however, forces the company to begin to organize itself. There are certain rules and conditions that are set in stone for going public: You need to have a full-fledged professional management team in place, you need a set of audited financials, ongoing accounting, no current accounts for members of the family within the company and so on and so on. So, yes, the fact of even thinking about going public has a positive impact on the organization of the company, on the fact that disagreements within the family would not destroy the company, but would just mean a transfer of shares....The rules in Saudi Arabia have been easing up. And Saudi Arabia is a hub, whether you like it or not. The bureaucracy, the problems with visas, all these impediments that have existed for quite some time all these things have encouraged a lot of companies to set up shop in Dubai. But they’re setting up shop in Dubai to do business in Saudi Arabia. In the medium to long term, from a business perspective, the current fascination with Dubai will disappear....Q: But if you look at the indices, for instance, on the time it takes to set up a business in the region. In Dubai, it takes a day. In Saudi Arabia, it takes six months. There are no taxes in Dubai. There are significant corporate taxes in Saudi Arabia. If I’m looking for a regional destination for my food-processing business, why wouldn’t I go to Dubai?...Today, yes, you’re better off setting up shop in Dubai assuming that you have perfect logistics that will get your products to Saudi Arabia. But, from what I’m seeing, there are significant, positive changes taking place in Saudi Arabia. Again, look at SAGIA; look at the reforms in the telecom sector, how you can now get a phone line in a day when, a year or two ago, it would have taken six months. The changes are taking place, and it’s in your interest to be close to your customer. Shipping goods from Dubai does not satisfy the requirements of your [hypothetical] food business. So, yes, Dubai has put in place a very attractive package. But, in the end, the interest of any manufacturer, or any businessman, is to be among his customers. And that’s what Saudi Arabia offers....Saudi Arabia is a country of 20-something million inhabitants, with the highest per capita purchasing power in the region. It’s the focus.Q: Hold on. Qatar, to name just one Gulf state, has higher per capita purchasing power.A: Yeah, but Qatar doesn’t count as a consumer market. Qatar doesn’t have the mass. Saudi Arabia has the mass and the purchasing power.---UNQUOTE---

---QUOTE---For educationalist Abdullah Al-Barkan, the issue is about more than schools. “The problem is the contradiction we live. We are asked not to use any form of physical punishment against students, yet punishment is practiced at home. We never learned how to use dialogue. Many children now resolve any problem they face by fighting and violence. This is what they need to focus on, more than they need to focus on teachers using violence.”

The issue of violence committed by teachers links with the matter of women possibly being allowed to teach boys at elementary schools. “I read early this week that Education Minister Dr. Abdullah ibn Saleh Bin-Obaid, is currently considering suspending problem teachers,” said Abu Jameel, a vice principal in a government boys’ school. “Problem teachers include those who deal badly with the students. I’m male and I admit that the majority of Saudi male teachers shouldn’t be teaching elementary school. Only a minority have their hearts in it or even care. I truly hope that our minister is serious and committed about clearing problem teachers out of our schools.”

So what does he think of women teaching elementary students? “It’s definitely an alternative solution until we have enough competent elementary male teachers. There should be no hesitation over making whatever changes are needed to help the education of future generations.” ---UNQUOTE; emphasis added---

"The ministry adopts dynamic and flexible measures in implementing its policies, in accordance with the needs of the labour market and within the framework of regulations that guarantee quality performance," said the official. He underlined that visa transfer impacts on the ministry's strategy concerning the duration of the labourer's stay in the country.

He said that the long stay of a foreign worker in the country might have undesirable implications that may run contrary to the higher interests of the UAE.

"Some countries in the region follow an approach whereby policies are made to limit the duration of foreign workers," he explained.

I can understand why the UAE, where nationals are 1 out of 5 in the population, would be concerned with retaining the understanding that a work visa does not establish a right to permanent residence. What I do not understand is why the only solution to that concern is the current system where the employer sponsors the employee's work visa, making the employer a de facto government agent for the policing the immigrant's location in the country.

DUBAI — Private schools collecting tuition fees a few months ahead of the new academic year will be dealt with strictly, according to Juma Al Salami, Assistant Undersecretary for Private Education at the Ministry of Education.

“The Ministry bylaws stipulate that fees in full, or, in instalments, should be paid by parents about a month prior to resumption of school for the new academic year. Besides, the registration and tuition fees in full, or, in monthly, or, quarterly instalments, can be paid upto a day before the commencement of class in the new academic year,” Al Salami said.

“The practice of charging advance fees to ensure a seat for the student in the new year exists in several private schools backed by powerful sponsors. But, we want to alert them that the practice is a violation of the Ministry's bylaws resulting in strict action against them.”

What's wrong with asking for earnest money? If the parents do not trust the school, then why are they sending their children there? There should be a price to pay for retaining the ability to change schools at the last minute because schools must make commitments in advance to teachers to ensure they have the number required for the start of school. The school could arrange a system where a well known bank administered the earnest money fund, removing the hazard that the school take the money and run.

On the other hand, to say that the tuition need not be paid until the day of commencement puts the schools in a difficult position. How do the schools enforce this contract without facing negative publicity brought about by parents' failure to pay? There have been such incidents as reported here and here. Frankly, I presume we've only heard the parents' side of the story in these cases. Sorry, parents, you need to take some responsibility for putting your children in this predicament.

DUBAI — Local poultry companies are slated to meet at the end of the month to discuss effective measures to protect the Emirates Poultry Producers Association's (EPPA) uniform price agreement reached in October 2004, and to seek more cooperation with retailers and distributors to help the industry survive.

The decision by the Ministry of Finance and Industry to convene with the EPPA members in Dubai follows violation of its uniform price policy by the Union Cooperative Society currently selling poultry brought from Oman under its brand name 'Al Itihad' at very low market price. The move has resulted in financial losses estimated at millions of dirhams for 16 local companies which have invested Dh1 billion in this industry.

Let a price floor be your umbrella. But make sure it doesn't leak or you'll really be in a world of hurt.

Consumers, who's looking out for your interest? I thought the government was on your side.

o New Zealand: "Fonterra Cooperative Group Ltd., the world's biggest dairy exporter, said it may pay its farmers 14 percent less for their milk next year as the rising New Zealand dollar erodes the value of its export sales.... World dairy prices have risen 50 percent in the past two years according to a U.S. dollar index of New Zealand dairy prices maintained by Commonwealth Bank of Australia. Much of that benefit has been eroded by the rising New Zealand dollar, which gained 22 percent against the U.S. dollar the same period. World dairy prices and demand remain at historically high levels, Van der Heyden said."

o UK: "FARMERS brought a Middlewich supermarket distribution centre to a standstill over what they see as a raw deal on milk profits. Members of the Farmers For Action pressure group set up a blockade of 83 tractors, stopping any vehicles entering or leaving the Tesco depot on Pochin Way until their position was recognised."

o California: "The federal government's stockpile of powdered milk for free distribution to poor and elderly people is expected to dry up in September. Higher milk prices are to blame: When prices are high, the government buys less dairy surplus — and that means less nonfat powdered milk goes into the government's giveaway program."

o Maine: On Monday, RetireSafe wrote to each Maine legislator saying the milk fee bill must be stopped. "It will raise milk prices, discourage milk consumption and severely harm Maine seniors and families," the letter stated.

Rep. John Piotti, D-Unity, said the bill is being fine-tuned before it goes to the House and Senate for votes. Piotti is co-chairman of the Legislature's Agriculture Committee, which unanimously supported the bill. Piotti said that the bill provides Maine farmers with a safety net against fluctuating milk prices and will help maintain the state's dairy industry.

He said he had no indication from processors, wholesalers or retailers that the fee would cause prices to rise. "It is a bill that Maine's dairy farmers desperately need and actively support," he said. "When the milk handling fee existed before, it had no negative impact on Maine consumers. We do not expect negative benefits now."

Comment: B.S. appears to be in ample supply in Maine.

o Ireland: " "Messrs Mildon and Rasmussen clearly confirmed to us that the Commission had no agenda to reduce market prices down to Intervention equivalent, and that there is, therefore, no justification for producer milk prices to be reduced on par with Intervention prices." ... Michael Murphy added: "Mr Mildon further confirmed that, were US casein prices and/or the US Dollar to weaken, the EU Commission's casein aid calculation formula would allow for the aid to increase. He also confirmed there is no plan or proposal within the Commission to abolish the casein aid. "He stated, however, that the new formula, which factors in US casein prices and the US$ exchange rate, could reduce the aid further if casein returns were to continue increasing due to the ongoing market price rises and exchange rate improvements. "

o Italy: "With a favourable opinion from the proposer and the government, the Senate has approved this morning the amendment of the Commission regarding Bill no.63/2005 on regional growth, regarding the abrogation of paragraph 551 of the 2005 Finance Act , which had transferred the responsibility of the administrative judges to the ordinary judges, bringing the fragmentation by the judges of the controversies over milk quotas between various courts. With this abrogation things return to their previous situation, allowing the reattribution of the jurisdiction on the subject to the regional judges responsible. "We have thus respected the undertaking taken with all farmers organisations to abrogate paragraph 551." "In these years indeed - added Agriculture Minister, Alemanno - the politically motivated use of resources has allowed for the accumulation of fines that has led Italy to pay the EU an average of 200 million euro a year." "Thanks to law 119 of 2003 this situation of failure to apply community rules has been resolved after 20 years." "Today - Alemanno concluded - AGEA will be able to continue its work with reference to certain norms, restoring the legality in more than 95 pct of Italian farmers are already situated." "

EVIDENTLY, the dairy business is quite complicated and needs lots government regulators to keep it from spiraling out of control. Alert those who believe in the invisible hand. Milking requires two hands, neither of which can be invisible. Probably, this is all due to globalisation, because we never had these problems with milk before. Clearly, we need a strong EU if we are to be able to fight economic superpowers like New Zealand.

The Beeb this morning has had considerable coverage of the EU vote coming up in France. I've seen the cycle of stories twice now. The general tenor of the nons is the fear that the EU will take France down the road of what they refer to as the ultra-liberal Anglo model of free markets. In the U.S. that model is referred to as the ultra conservative Reagan model. Nevermind, I know what they mean.

The line that really sticks in my mind is from a French female intellectual saying something like "IF you have a job, you enjoy job protections, good working hours, and a good pension. People don't want to lose that system."

IF, indeed.

UPDATE: I'd missed The Timesarticle of the 25th reporting on an interview with Valéry Giscard d’Estaing.

“The people are worried that the system goes too far in the direction of the Anglo-Saxons — that this excessive ‘liberalism’ is endangering their conditions of work and life. That is just wrong. The constitution takes no step in [that] direction and its economic model remains the European one of the social market,” he said.

If voters know mainstream media is captive to the state, don't they discount what the state media has to say?

Also, it seems to be taken the state-run television is there to be the mouthpiece of the government in power. What sort of journalists are attracted to this sort of enterprise? Imagine the reaction if Bush gave orders to Jim Lehrer on what to say.

Europe. Home to the Enlightenment. And that also brought you the Crusades, the Dark Ages, the Inquisition, Nazism & c.

Reminds me of this line from Instapundit yesterday: "Tom Wolfe once said that Fascism is forever descending on the United States, but that somehow it always lands on Europe."

Thursday, May 26, 2005

JEDDAH, 26 May 2005 — Civil department employees in Jeddah were surprised when an old man came to their office in order to register his new wife. The problem was that the woman would have been his fifth wife. The office supervisor transferred the problem to the court which decided that the old man could not have more than four wives on his family card and if wanted to marry again, he must divorce one of the others. The man then requested some time to think and after thought and consideration, he decided to divorce his first wife. He said he needed the new wife because she is an excellent cook.

o A man's home is his car-stle: "Closer inspection revealed that this man, apparently a Russian, had been living in the car for months. It was filled with clothes, papers, old junk food cartons, and - most sinisterly - several bottles of unlabelled, odourless brown liquid on the back seat."

o "The Arab Human Development Report is a very remarkable document for two reasons: one is that it represents the most wholehearted embrace of the concept of liberal democracy that I have seen coming out of the similar document. It even represents a change over previous documents because one of the most remarkable things to me is that the report goes through one by one some of the arguments that have been historically used to - by Arabs to argue Arab intellectual - to argue why is it that democracy is not suitable for the Arab world. And what the report does, it refutes them one by one, so that it really comes out in the end with a wholehearted embrace of the concept of liberal democracy."o "the second issue, which has bothered me for a long time, and I hope all the panelists will in due course offered opinions on it, is whether in fact democracy is possible in a rentier state. If you consider the history of democracy in the West, the mother of parliaments, the British House of Commons was convened by the king because he required money."

o "The stalled metaphor doesn't really capture what's going on. A tremendous amount of change has happened in the decade since Jordan and Yemen both initiated openings and didn't really push them very far. So I wanted to use those cases as an example."

o "I do public opinion polls in largely in six Arab countries that include Egypt, Saudi Arabia, Morocco, Lebanon, the United Arab Emirates, and Jordan. And ... as of 2004 when you ask people ... in those six countries: do you believe that the Middle East is more democratic or less democratic than it was before the Iraq War? The vast majority of people in every country believe the Middle East had become less democratic than it was before the Iraq War....why is that the public perception, certainly part of it is probably psychological. I mean you've had 90 percent of the people really oppose the war and it's very hard to then come back and say, well, something good came out of it....But in the reality I think there's something objective that they're seeing that transpired....Arab governments had to make a strategic decision whether they support the U.S. or not support the U.S, and they made a strategic decision generally to support the U.S. and in the process they became far more insecure; they preempted organizations, they arrested, they limited the freedom of speech and in the case of Egypt, extended emergency law on the eve of the Iraq War."

Agence France-Presse (AFP)...Influential politicians, Muslims as well as Christians, demanded payments of large sums of cash from would-be candidates seeking to be on the “list of winners”, which would have usually been close to power, said sociologist Melhem Chaoul.... “He who gets a job in the public sector due to a string-pulling by a minister should show his gratitude at the ballot box,” said Chaoul.... A UN report said that acts of “vote buying and irregularities are known... but difficult to prove.”

No self-respecting blogger would refer to "a UN report" and then not link to it. We shouldn't let newsagencies get away with it not providing link.

I didn't find the "UN report" but see the Freedom House report on Lebanon. Once established, a culture of corruption is difficult to root out; it is doubtful that all is sweetness and light now that the Syrians have left.

...merely imagining its existence and describing in a theoretically coherent way why and how it might come to be and persist is a very poor reason for believing that such externalities do, in fact, exist. Such imaginings are certainly inadequate grounds for suggesting policies to deal with these alleged externalities.

Instead, look for alternative explanations other than externalities before succumbing to the easy answer:

...because Americans have more and better household appliances, such as automatic dishwashers and clothes dryers, than do Europeans -- and because Americans have larger homes (hence more storage space) and are better able to shop at supermarkets and big-box retailers -- Americans probably spend less time working at home than do Europeans.

I don’t know if Americans’ greater access to time-saving appliances, more household storage space, and larger retailers helps to explain these transatlantic differences in time spent on the (formal) job, but the possibility seems real enough.Now, that's a story which is both pedestrian and inspired.

Becker and Posner agree the blogosphere regulates itself well enough. As always, they bring the standards tools of economics to support their thesis.

Posner:

The idea of parity among media is attractive, since exempting the producer of a close substitute of a taxed or regulated product from taxation or regulation tends to promote inefficiency; the exemption operates as a subsidy. The parity issue is starkly presented by the question whether to tax Internet transactions, discussed below. With respect to blogs, the contention is that exempting them from ethical or other informal (or formal) regulation subsidizes their competition with the mainstream media. Not that they are or would be totally exempt from controls over content; there is no legal exemption for a blog that defames someone, invades the person’s right of privacy, exhibits child pornography, reveals classified information, infringes copyright, or otherwise violates generally applicable laws, though in many cases the bloggers will not have sufficient resources to make suing them for money damages an attractive course of action. But there is no compulsion on bloggers to comply with the ethical standards applicable to the conventional media. Moreover, they face less market pressure to comply with ethical standards than the conventional media, because they generally are not supported by advertising revenues (though this is changing) and thus don’t have to worry about offending advertisers—or for that matter viewers, since bloggers do not charge for visiting their sites.

Nevertheless I think this “exemption” of blogging from the ethical standards applicable to the mainstream media makes good economic sense because of economic and technological differences between those media and the “blogosphere.”

I agree with Posner that additional regulation of blogging and other internet postings is undesirable and unnecessary. Robert Merton, the late outstanding sociologist of science, demonstrated that the main way plagiarism and dishonesty are “policed” in research is through the incentives provided other researchers to discover and expose such malfeasance. These incentives are even more powerful in blogging and other internet activities, where many thousands of individuals seek to discover serious errors committed by bloggers, business leaders, and politicians. I have been impressed by the extent of the information revealed in comments on our blog, far more than in the responses per column from readers during the almost 20 years I wrote for Business Week magazine.

On the keywords Bahrain and Online, Google News gives us these recent items

o Bahraini bloggers face criminal charges :: Guardian: "Although the state telecoms' monopoly has been trying to block it since 2002, Bahrain Online is the country's most popular website. It has has 26,000 registered users. The Gulf state's technologically literate youth have become adept at accessing the site (which is hosted in the US) through proxy addresses."

o University of Bahrain improves network performance with 3Com switching solution: Supported by the 3Com solution, the university's 20,000 students can now readily remote-access the university's network from anywhere in the world. Students and teachers are able to access learning tools at e-libraries, engage in videoconferences with their professors, and exchange papers and corrections over the network with minimum delay.

Wednesday, May 25, 2005

"It’s not fair to examine all policies in non-EU countries, but not all policies in EU countries. We think countries should be measured according to the same standards", one official at the OECD from a non-EU country told the EUobserver.

Based in Paris the OECD brings together 30 countries sharing a commitment to democratic government and market economies.

There are 19 EU countries in the OECD together with industrialised countries in the world.

The countries allow the OECD to compare, analyse and comment on their individual economies in regular reports. The surveys often include recommendations for political action to be taken by the organisation’s member states.

---QUOTE---Even in tasks where they do well, women seem to shy away from competition, whereas men seem to enjoy it too much," Professor Niederle said. "The men who weren't good at this task lost a little money by choosing to compete, and the really good women passed up a lot of money by not entering tournaments they would have won."

You can argue that this difference is due to social influences, although I suspect it's largely innate, a byproduct of evolution and testosterone. Whatever the cause, it helps explain why men set up the traditional corporate ladder as one continual winner-take-all competition - and why that structure no longer makes sense.

Now that so many employees (and more than half of young college graduates) are women, running a business like a tournament alienates some of the most talented workers and potential executives. It also induces competition in situations where cooperation makes more sense. The result is not good for the bottom line, as demonstrated by a study from the Catalyst research organization showing that large companies yield better returns to stockholders if they have more women in senior management.---UNQUOTE---

One woman trying to leave the building was pounced upon by Mubarak loyalists who punched and pummeled her with batons and tore her clothes. As police looked on, the woman screamed, then vomited and fainted.

An Associated Press reporter on the scene said plainclothes state security investigators were beating, groping and verbally harassing demonstrators, particularly women. About a dozen people, mostly women, were violently cornered and surrounded by nightstick-toting plainclothes police. Some began beating demonstrators. The AP reporter was grabbed and pulled by the hair.

---QUOTE---Gulf Arab finance ministers have agreed that duty-free US imports may be exempted from their unified tariff system, accepting that they cannot stop bilateral free trade deals with Washington, a Gulf source said yesterday. He said the agreement by finance ministers earlier this month to accommodate individual accords with the United States will be presented to foreign ministers of Gulf Cooperation Council (GCC) for approval on June 4....The issue is not expected to be a major point of contention at Saturday's summit meeting of Gulf leaders in Riyadh, which will review a progress report on the GCC customs union and progress towards a common market and monetary union in 2010.---UNQUOTE---

---QUOTE---The venture is 51% owned by Renault, despite a law passed this year banning foreign firms from majority ownership. The law, passed in September 2004, imposed a retroactive 20 March cut-off point. Renault signed its deal for Renault Pars, as the venture is known, four days earlier....Iran, like many other countries, has had a history of borrowing car designs from abroad. For 40 years, its most popular car was the Paykan, a pollution-spewing copy of the 1960s British Hillman Hunter. The Paykan was finally discontinued by Iran Khodro earlier this month.--UNQUOTE--Thanks to M. A. for the link.

I picked up a meditation that Massimo d'Azeglio, a Piedmontese aristocrat who embraced that "springtime" in Europe, offered about his time, which speaks so directly to this Arab time: "The gift of liberty is like that of a horse, handsome, strong, and high-spirited. In some it arouses a wish to ride; in many others, on the contrary, it increases the desire to walk." It would be fair to say that there are many Arabs today keen to walk - frightened as they are by the prospect of the Islamists coming to power and curtailing personal liberties, snuffing out freedoms gained at such great effort and pain. But more Arabs, I hazard to guess, now have the wish to ride. It is a powerful temptation that George W. Bush has brought to their doorstep.

The central cooling is being run by an outside company, which provides cold air to all apartments for a flat fee, which is added to tenants’ DEWA bills. “If we put an air conditioning unit in each building their bills would triple,” he said. “No company does district cooling based on usage.”

This would make a good intermediate microeconomics exam question: Compare the consumer's maximum utility when they are charged a flat rate and when they are charged a rate based on usage. Show that some kinds of consumers prefer a flat rate and others do not. Assuming district air is 3 times as efficient (in energy usage) as individual units for the same amount cooling, does that mean that district air is better?

I wonder if it is possible to charge individuals for their usage of district cooling; is it feasible but just too cheap to meter?

Dr Ahmed Al Kubaissy, a leading Islamic Scholar, yesterday called on lawmakers to allow national women to marry non-UAE nationals and halt a “daily” rise in the number of unmarried Emirati women.... Speaking at a Dubai “symposium on spinsterhood”, organised by the Juma Al Majid Centre for Culture and Heritage in collaboration with the UAE Marriage Fund, Al Kubaissy said that national women should be allowed to marry other Muslims and Arabs in order to combat a rise in the number of UAE national men marrying foreigners - or at least limit national men to marrying only national women. Elaph.com reported the symposium highlighting “an economic change in UAE society” as the the biggest factor behind this trend, including the increasing cost of dowries, luxury furniture and bridal gifts.

CB to 'name and shame' if banks repeat mistake - Khaleej Times: "Industry sources said some banks other than those penalised were “uncomfortable” with the Central Bank's decision of not revealing the names of the four banks, saying ‘moral penalties’ are also needed in such cases....“By declining to identify the banks it put all banks in an unfavourable situation and left a negative impact on the stock market,” said Ziad Al Dabbas, manager, domestic capital markets, National Bank of Abu Dhabi (NBAD). "

Declining to name the offenders is collective punishment. Good banks are being held accountable for the actions of the offending banks.

Bloggers as a group combine two attributes -- the ability to assemble expertise on almost any topic at extreme speed, and the propensity to write at very high velocity. This combination of expertise and velocity comes at the cost, perhaps, of sobriety (there's the tavern metaphor) and deliberation. However, the competing tendency of bloggers to edit each other, also at high velocity, limits the potential damage of errors of fact.

One of his commenters adds:

Blogging is in some respects nothing really new in America. It's the free expression of opinion and ideas. What's truly revolutionary is its low cost of production and distribution for so many people with opinions.

Blogging has the potential in many parts of the world to replace the cliche mimeograph machine in the closet. Unless they want to go the route of a North Korea, it is difficult for regimes to maintain control over what their people read and communicate. That's truly revolutionary.

When contacted, Humaid Mohammed Al Shamsi, Assistant Under-Secretary of Pharmacy and Supplies at the Ministry of Health (MoH), confirmed that the ministry has received warnings from some drug firms to cease importing essential products once the ministry failed to pay them their dues....He said the MoH is involved in negotiations with the Ministry of Finance and the pharmaceutical companies that are much affected, to resolve the issue and make sure all drug firms dealing with the ministry received their pending entitlements....He pointed out that there are more than 100 pharmaceutical companies that import 800 different drug products to the ministry, in addtion to other sundries.

Elaborating on pending dues, Abdullah Mohammed Al Ahmadi, Manager of the Finance Department at the MoH, said there was no set deadline to pay the companies, noting the ministry faces a financial problem. "There is no deadline to pay back these firms. We pay drug companies on annual basis. There is a Dh25 million deficit in allocations for drugs and medical supplies," Ahmadi said. He said the ministry of finance has earmarked Dh95 million for drugs and medical supplies while the actual financial needs was estimated at Dh120 million.

I'm not sure what is going on. It sounds as simple as this: the MoH has ordered drugs and does not have the money to pay for them. It sounds as if these are drugs that are disbursed to patients at no charge, presumably citizens.

---QUOTE---Abdul Rahim Al Kuwairi, a legal consultant and former dean of Sharia at Qatar University, said the exclusion of women from Qatari and Gulf courts created a void in the judiciary's performance....There are no women judges in the Gulf courts, he said, although female students represent the majority of those attending law faculties in the region....Asked whether the country would be ready to accept women judges in courts, [Aisha Al Mannai, dean of the faculty of Sharia at Qatar University] said: "I think women are still discriminated against and there is still scepticism of their capabilities, especially in some spheres of society," she said.

However, she said women would undoubtedly improve the performance of the judiciary. "Women would have a more open approach and wider perspective. They would help implement a more modern and maybe 'fairer' personal law, taking into consideration the needs of the weakest in the family, such as women and children," she said.---UNQUOTE---

Satoshi Kanazawa, the LSE academic who led the research, explained last week that in the general population, roughly 105 boys are produced for every 100 girls. But according to his calculations, among engineers and other “systemisers”, the ratio is 140 boys for every 100 girls, and nurses have 135 daughters for every 100 sons.

Kanazawa said that a physicist and a mathematician would be the most likely pairing to produce a boy, while it would be worth betting that a therapist and a chat-show host would have a girl.

The study lists insurance executives, architects and management consultants as being among systemising occupations, while empathising jobs include dieticians, careers advisers and those who work with children. Kanazawa, along with other experts, is unsure exactly why the effect should occur.

John Manning, a specialist in evolutionary psychology at the University of Central Lancashire, said the findings could be due to the effect of testosterone in the womb. Manning said: “High testosterone levels before birth cause a slight excess of sons, but we don’t know why.” There was evidence that children of systemiser parents encountered more testosterone in the womb than the children of empathiser parents, and were thus more likely to be male.

Interesting line of research for a management professor.

Conclusion? Unless being in a male-dominated job causes a woman to produce more testosterone, then you cannot increase your chance of giving birth to boy by being an accountant. The causation is probably the reverse: that is, women with more testoterone are more likely to select male-dominated professions. That selection could be for reasons of aptitude or interest, or because the working environment in these occupations is accepting of females with male traits.

The new rule, according to an Abu Dhabi-based Arabic daily, was issued under the instructions of President His Highness Shaikh Khalifa Bin Zayed Al Nahyan in response to complaints by motorists about the increasing number of radars on main highways and suggestions to increase the maximum speed limit to match the emirate's wide and spacious roads.

Many of the roads in the U.A.E. are world class.

Where much of the trouble comes in is that there can be a lot of truck traffic and the trucks in use are comparatively slower than trucks in, say, Europe. In addition, many automobile drivers who prefer a slow pace have no alternatives to taking the expressways.

Variance kills. The result is that there is substantial variance in speeds. It is well known that it is not so much speed that kills, but variance. The usual findings are that when speed limits are raised to the speed limits the road was built for variance declines, average speed increases, and fatalities decline. This is because the drivers obeying the posted limits increase their speed more than those who were speeding under the old limits.

But in the case of the U.A.E. I fear this will not happen, because there will be little or no change in the speed of the traffic which is already below the posted limit.

DUBAI — The UAE Central Bank's decision to go ahead with punitive action against four National Banks which had violated the prescribed leverage limits for IPO financing has hit hard the share prices of most banks yesterday.

With the Central Bank refusing to name the banks against which it had initiated action, the local market was rife with rumours which resulted in investors speculating different names.

On Abu Dhabi Securities Market, there was across the board fall in the share prices of banks. All leading banking scrips closed lower with Abu Dhabi Islamic Bank and the First Gulf Bank shares slipping 4.4 per cent and 4.98 per cent, respectively.

Why don't banks that were not punished by the Central Bank issue denials?

The Central Bank yesterday came down heavily on banks, which were offering leverage far in excess of the permitted level of 1:4. The market expects that the strict action by the Central Bank will have a major impact on the bottomlines of all banks, which earned quick profits from leveraging. The lone exception to the market trend yesterday was Dubai Islamic Bank, which closed marginally up by 10 fils at Dh239.45....

Although the market has been falling for past few days, the sharp fall of banking scrips during yesterday's session is seen more as a response to the Central Bank action. “The whole sector has been affected with most shares closing lower. This indicates that the names of these banks are not yet known to the investors and the market is merely following different romours. However, one thing is certain that the banks' margins will come under strain in the third and fourth quarters,” said an investment analyst. Most local banks had reported more than 30 per cent increase in their net profits for the first quarter of 2005.

While a significant number of banks posted more than 60 per cent increase in their Q1 profits, there were a few even reported more than 100 per cent increase in their net profits in the first quarter. The Central Bank's circular No 25/2005 had directed banks not to provide loans to investors greater than five times (1:4) the investment made by the investor. The central bank action to penalise a few banks, which violated the guidelines, confirm that there have been rampant excessive leveraging in some of the recent IPOs.

It has been a common practice among banks that well-heeled investors were offered credit lines on leverage of more than 1:10 percent purely on their credit standing, reputation or in some cases personal relations with leading bank executives.

Also, Abu Dhabi and Dubai shares trade in opposite ways: "The market is now down 9.3 per cent from its May 2 peak of 6,266.53 points after losses of 0.67 per cent in the past week. The Abu Dhabi banking index shed 2.09 per cent after the central bank last week imposed a penalty on four state banks for their excessive lending to fund bids for IPOs."